Texas Racing Commission regains state funding

Here’s a look at some of the historical horse racing machines at the Kentucky Downs.
Kentucky Downs
Kentucky Downs

The Texas Racing Commission appears to be getting the green flag to keep guiding racing at horse and dog racetracks statewide.

It has been up in the air for months whether the agency, which has been in hot water with some conservative state lawmakers, would continue to receiving funding or even exist.

Since January, state lawmakers upset that the commission agreed over their objections to allow historical racing — the replaying of past races on slot machine-like devices — have threatened to defund the agency or dissolve it entirely.

But a new budget agreement shows that the agency will continue to receive funding, which allows them to operate, although the Legislature is still in session and could make last-minute changes.

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“I’m very pleased with the action,” said Robert Schmidt, a local orthopedic surgeon who heads the commission, upon hearing the news.

Shortly after the funding was announced, the commission posted an agenda for a Rules Committee meeting on Thursday where members will consider repealing the historical racing rules approved last year.

All this comes with just a week before the 84th Legislative Session ends June 1. The budget includes funding for the commission, but it also notes that all central administrative funding such as salaries must be approved by the Legislative Budget Board.

“When an agency does not demonstrate a fundamental understanding of where its authority ends and the Legislature’s begin, we have to take additional steps to ensure checks and balances,” said state Sen. Jane Nelson, R-Flower Mound, whose district includes parts of Tarrant County.

“That was the purpose of this rider, and now the Legislative Budget Board can provide greater oversight over the use of the commission's funds.”

Ongoing Texas saga

Historical racing, or instant racing, has been controversial in Texas, where lawmakers consistently reject requests to expand gambling.

It involves replaying races on machines with sounds and symbols similar to slot machines. Unlike slots in traditional casinos, the payoff of racing machines is tied to past race results. No information such as horse names, dates and tracks is included that could help players identify the winners in advance.

Last August, the Texas Racing Commission approved historical racing at dog and horse race tracks statewide even though some conservative lawmakers had asked commissioners to not weigh in on the plan.

State Rep. Matt Krause, R-Fort Worth, asked a judge to prevent the commission from voting. After a Tarrant County judge declined to issue a restraining order against the agency, commissioners voted 7-1 to allow historical racing.

Supporters say historical racing is needed to help struggling Texas racetracks compete with out-of-state tracks that offer casinos, bigger crowds and bigger purses. Opponents fear the machines would bring a form of casino-style gambling to the state.

Krause filed a lawsuit claiming commissioners lacked the authority to allow the machines, but that suit was dismissed.

A second lawsuit found more success. This suit was filed in Travis County by a coalition of charitable bingo groups that said the machines might run them out of business. An Austin judge agreed, saying such decisions should be left to lawmakers.

Officials with the Texas Racing Commission have said they won’t appeal the ruling; a coalition of racetracks has said they will.

The commission late last week announced that the Rules Committee will meet Thursday to consider a number of rule amendments, including one to repeal all the rules regarding historical racing.

If the committee approves moving forward with that, the rules would be published for another 30 days of public comment and the full commission could vote on the changes as soon as August.

Lawmakers’ turn

When lawmakers began the 84th Legislative Session in January, some decided to take action.

Nelson filed a state budget that stripped $15.4 million in funding from the Racing Commission; state Sen. Craig Estes, R-Wichita Falls, filed a proposal to dissolve the commission and transfer its duties to another agency.

Nelson earlier this session said during a hearing that the commission is “an agency that has gone rogue, in my opinion.”

The Racing Commission is self-funded by the industry it regulates. It collects millions of dollars a year in fees paid by racetracks and license holders such as owners, trainers and jockeys. That money is turned over to the state, which allocates it back to the commission.

The Estes bill, which would have transferred the commission’s duties to the Texas Commission of Licensing and Regulation, never made it to a committee hearing.

The House’s budget bill included funding for the agency, and when the measure came out of conference committee recently, funding for the agency remained.

“What I wanted was a message to be sent to agencies that act outside their constitutional bounds,” Krause said. “If that message is received, that’s great. I know there will be further scrutiny of the commission in future years.”

Racing Commission officials say they plan to stay on track.

“We look forward to continuing our mission of enforcing the Texas Racing Act and its rules,” said Robert Elrod,✔ a spokesman for the commission.